[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Notices]
[Pages 56515-56521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28116]
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DEPARTMENT OF COMMERCE
[A-549-502]
Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: On May 9, 1996, the Department of Commerce (the Department)
published the preliminary results of the administrative review of the
antidumping duty order on certain welded carbon steel pipes and tubes
from Thailand. This review covers Saha Thai Steel Pipe Company, SAF
Steel Pipe Export Company, and Pacific Pipe Company. The period of
review (POR) is March 1, 1994 through February 28, 1995. We gave
interested parties an opportunity to comment on our preliminary
results. Based on our analysis of the comments received, we have
changed the results from those presented in the preliminary results of
review.
EFFECTIVE DATE: November 1, 1996.
FOR FURTHER INFORMATION CONTACT: James Rice or Jean Kemp, AD/CVD
Enforcement Group III, Office 9, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-
1374 or (202) 482-4037, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act), by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
current regulations, as amended by the interim regulations published in
the Federal Register on May 11, 1995 (60 FR 25130).
Background
On May 9, 1996, the Department published in the Federal Register
the preliminary results of the administrative review of the antidumping
duty order on certain welded carbon steel pipes and tubes from Thailand
(61 FR 21159, May 9, 1996). The Department has now completed this
administrative review in accordance with section 751 of the Act.
Scope of the Review
The products covered by this administrative review are certain
welded carbon steel pipes and tubes from Thailand. The subject
merchandise has an outside diameter 0.375 inches or more, but not
exceeding 16 inches. These products, which are commonly referred to in
the industry as ``standard pipe'' or ``structural tubing,'' are
hereinafter designated as ``pipe and tube.'' The merchandise is
classifiable under the Harmonized Tariff Schedule (HTS) item numbers
7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055,
7306.30.5085 and 7306.30.5090. Although the HTSUS subheadings are
provided for convenience and Customs purposes, our written description
of the scope of the order is dispositive.
[[Page 56516]]
Verification
As provided in section 782(i) of the Act, we verified information
provided by Saha Thai and SAF by using standard verification
procedures, including on-site inspection of the manufacturer's
facilities, the examination of relevant sales and financial records,
and selection of original documentation containing relevant
information. Our verification results are outlined in the public
versions of the verification reports.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments and rebuttal comments from
Saha Thai/SAF, manufacturers/exporters of the subject merchandise
(respondents), and from Allied Tube & Conduit Corporation, Sawhill
Tubular Division of Armco, Inc., American Tube Company, Inc., Laclede
Steel Company, Sharon Tube Company, Wheatland Tube Company, and Eagle
Pipe (petitioners).
Comment 1: Petitioners contend that for Saha Thai/SAF's U.S. sales
the Department used an incorrect date of sale in its margin
calculation. These incorrect dates were used to determine which sales
took place in the POR, for choosing exchange rates, and for product
matching with home market sales. Petitioners argue that the dates
provided to the Department reflect downstream sales made by parties in
the United States who the Department determined were not related to
Saha Thai or SAF (see memo from Joseph A. Spetrini to Susan G. Esserman
dated April 29, 1996). Because respondent did not provide any sales
dates reflecting the transactions between Saha Thai/SAF and U.S.
importers/resellers, and because certain invoice dates for SAF sales
represent sales based upon long-term contracts which may have been
signed months or years in advance of the invoice date, petitioners hold
that the appropriate date of sale is either the date of the underlying
contract or the date of the purchase order from the U.S. customer to
SAF. However, since neither date appears in SAF's sales listing,
petitioners contend that it is impossible to determine which sales are
appropriately in the POR.
In addition, petitioners argue that there is an unknown universe of
sales contracts and purchase orders made during the POR which would
have been sold by the importers after the POR. These sales were not
reported as Saha Thai sales because the basis for reporting Saha Thai's
U.S. sales was the importers' sales to downstream customers. These
sales may or may not have had SAF invoice dates or entry dates within
the POR. The only other date reported by Saha Thai is the shipment
date, but again, this date does not reflect the date of the sales
contract or purchase order date.
As a result of this failure to place the necessary date of sale
information on the record of this review, petitioners argue that the
Department should base its final results on facts available, pursuant
to 19 U.S.C. 1677e(a), which states that the Department shall base its
determination on the facts available, subject to certain
qualifications, ``if: (1) necessary information is not available on the
record, or (2) an interested party or other person--(A) withholds
information that has been requested by the administering authority * *
* (B) fails to provide such information by the deadlines for submission
of the information or in the form and manner requested, subject to
subsections (c)(1) and (e) of section 1677m of this title, (C)
significantly impedes a proceeding under this subtitle, or (D) provides
such information but the information cannot be verified. * * *''
Petitioners contend that respondents have clearly withheld
information requested by the Department which, if provided, would have
allowed the Department to complete its statutorily mandated tasks in
this review. Specifically, the Department requested information
regarding the sales process between Saha Thai and its customers.
According to petitioners, Saha Thai failed to provide a complete
explanation of its sales process and did not clearly state that it
enters into contracts for the sale of pipe, either directly or through
SAF, to the importers. It provided no details of any such contracts,
and did not provide an example of a contract prior to verification. In
addition, the Department warned Saha Thai in a letter of January 11,
1996 that it should ``be prepared to reclassify these SAF-related sales
if the Department determines that they should be treated as EP sales.''
Petitioners assert that this is an unambiguous request for Saha Thai to
ensure that the proper information was on the record to perform an EP
sales analysis. Saha Thai responded by simply stating that ``there is
no legal basis for reclassification of SAF-based U.S. sales.''
Petitioners contend that the information currently existing on record
cannot be used for the final results under 19 U.S.C. 1677m(e) since the
response is so incomplete that it cannot serve as a reliable basis for
reaching the final results and cannot be used without undue difficulty.
Consistent with sections 1677e(b) (3) and (5), the Department should
apply the 17.28 percent margin found in the amended final results of
the 1992-93 administrative review. Petitioners add that resorting to
facts available would be consistent with Departmental practice, as
evidenced by Circular Welded Non-Alloy Steel Pipe from South Africa (61
FR 24271, 24272-3, May 14, 1996) and Circular Welded Non-Alloy Steel
Pipe from Brazil (57 FR 42940, September 17, 1992), affirmed sub nom.
Persico Pizzamiglio S.A. v. United States, Slip Op. 94-61 (CIT 1994).
Respondents argue that they prepared their questionnaire response
based on the assumption that the Department would accept their
arguments that Saha Thai's U.S. sales would be considered CEP sales due
to the relationship which existed between the producer/exporter and
importer/reseller in the U.S. The respondents did not anticipate the
Department's contrary decision. Saha Thai argues that neither the
Department nor petitioners raised any significant concerns over the
dates of sale reported in Saha Thai's responses, and did not advise
Saha Thai that it should report two dates of sale in its supplemental
questionnaire response, one for the resale in the United States and one
for the sale from Saha Thai to SAF. Respondents add that petitioners'
call for the use of facts available is an ``extraordinarily harsh''
result, considering the circumstances involved in this case.
Respondents agree with petitioners that the incorrect date of sale
was used in the preliminary determination and that a date of sale,
using pre-URAA methodologies, does not appear in the response.
Respondents propose that the Department use Saha Thai's invoice date as
the date of sale for purposes of its final determination. According to
Saha Thai, the proposed antidumping duty regulations make invoice date
the date of sale in most circumstances, including those prevailing in
this administrative review. Proposed section 351.401(i) states that
``in identifying the date of sale of the subject merchandise or foreign
like product, the Secretary normally will use the date of invoice, as
recorded in the exporters or producer's records kept in the ordinary
course of business.'' As an alternative, Saha Thai suggests that the
Department reopen the administrative record for the limited purpose of
permitting Saha Thai to submit the dates of sale for all sales subject
to review.
Respondents also disagree with petitioners' concerns that certain
sales subject to the review are missing from the data base. Respondents
assert they
[[Page 56517]]
reported all sales which entered the U.S. during the period of review.
Department's Position: In its questionnaire response, Saha Thai
asserted that because it and its two primary U.S. customers shared an
ownership interest in SAF Steel Export Company, the importers/resellers
in the United States were related to the producer/manufacturer by means
of this common ownership of SAF. Saha Thai reported the subsequent
downstream sales as constructed export price (CEP) sales made to the
first unrelated party in the United States. However, in our preliminary
results, we treated Saha Thai and SAF as a single enterprise and
determined that this enterprise was not related to the importers/
resellers in the United States, and we instead used Saha Thai/SAF's
export price (EP) sales to these importers/resellers as the United
States sales. As a result of this decision by the Department to review
the EP sales made by Saha Thai/SAF rather that the downstream sales
originally reported as CEP, the Department finds that the record of
this review does not contain the information normally required to
determine the date of sale to be used to compare these EP sales to
normal value. Given this background, the Department agrees with both
parties that an incorrect date of sale was used in the preliminary
results of this administrative review for these sales.
However, the Department disagrees with petitioners' assertion that
resorting to facts available is appropriate for our final results.
Although respondents contend that they had no expectation that the
Department would examine Saha Thai/SAF's sales to the U.S. importers,
respondents should have reported the contract date of the sales in
question. Notwithstanding the deficient content of Saha Thai's
response, the Department determines that resorting to facts available
in this review would not be appropriate because Saha Thai's response is
otherwise usable within the meaning of section 782(e) of the Act. Saha
Thai's response was timely and verifiable. The response also listed the
invoice dates of sales made by Saha Thai/SAF to the U.S. importers/
resellers, which the Department has found to be a reliable alternative
for the missing date of sale information. Moreover, the Department does
not consider respondents to have withheld ``information that has been
requested'' by the Department, as the Department did not clearly
instruct Saha Thai/SAF to report the date of sale for its sales to the
U.S. importers.
Although the dates of sale of transactions between Saha Thai/SAF
and the primary U.S. importers/resellers are not on the record of this
proceeding, the respondent did provide, and the Department verified,
the invoice date pertaining to these sales made by Saha Thai/SAF to the
importers/resellers in the United States. Because the Department has
determined that the use of facts available is not appropriate, the
Department has determined to use invoice date as date of sale. Using
invoice date as date of sale is consistent with the Department's
proposed antidumping regulations and represents a reasonable surrogate
for the actual date of sale when the essential terms of the sale were
established: as stated in the Department's Notice of Proposed
Rulemaking and Request for Public Comment (61 FR 7308, 7330, February
27, 1996), the Department ``will rely on the date of invoices as date
of sale.''
The Department acknowledges that certain U.S. sales were made
pursuant to long-term contracts between Saha Thai/SAF and the U.S.
purchasers/resellers and that there may be a substantial lag between
the contract date and invoice date. However, the Department verified
that Saha Thai/SAF reported all invoices during the POR that were
issued pursuant to these contracts and that these invoices contain the
price, quantity, specifications, and the terms of sale established in
the long-term contracts. We are assured that we analyzed all sales of
subject merchandise which were shipped to the United States during the
POR. Therefore, after extensive consideration of the date of sale
issue, we conclude that for the sales in question it is reasonable to
utilize date of invoice as date of sale.
Comment 2: Petitioners allege that the Department has incorrectly
reduced the amount of ocean freight to be deducted from export price by
multiplying that value by the exchange rate. Saha Thai's reported ocean
freight was reported in U.S. dollars/MT. Therefore, the Department
erred by multiplying this value by the exchange rate. Respondents did
not address this issue.
Department's Position: We agree with petitioners, and the final
results incorporate this correction to the program.
Comment 3: Petitioners contend that the Department erred by
deducting indirect selling expenses and inventory carrying costs from
both export price and normal value. Such deductions are appropriate
only in a constructed export price scenario (see 19 USC 1677a(d)).
Saha Thai states that U.S. direct selling expenses should not have
been deducted from export price, in accordance with section 772 of the
URAA.
Department's Position: The Department agrees with both parties
that, in accordance with section 772 of the Act, direct and indirect
selling expenses should not have been deducted from export price. Also,
indirect selling expenses should not have been deducted from NV, in
accordance with section 773 of the Act. These corrections are reflected
in the final results.
Comment 4: Petitioners argue that, in calculating constructed value
(CV) for four products not sold in the home market, the Department
applied an incorrect methodology to calculate profit. Petitioners
allege that the department calculated CV profit based upon the average
profit of all the products sold in the home market. Petitioners contend
that the Department should have calculated the profit on these four
product codes using the average profit of those home market sales that
passed the arms-length test and exclusive of sales made at below cost
of production. Petitioners add that 19 USC 1667b(e)(2)(A) requires that
CV profit be calculated using ``actual amounts incurred and realized *
* * for profits, in connection with the production and sale of a
foreign like product, in the ordinary course of trade, for consumption
in the foreign country. * * *'' According to petitioners, the statutes
states that sales disregarded pursuant to 19 USC 1667b(b)(1) as being
made at below the cost of production shall be outside the ordinary
course of trade (see 19 USC 1677(15)).
Respondents contend that the Department's calculation of profit for
merchandise sold in the United States but not in the home market is
correct. Respondents state that the Tariff Act of 1930 as amended by
the URAA and the accompanying Statement of Administrative Action (SAA)
clearly state that the exclusion of below-cost sales is not required
nor is contemplated by the statute to calculate the profit for products
not sold in the home market. According to respondents, 19 USC
1677b(e)(2)(A) states that the profit used in constructed value shall
be based on the ``actual amounts incurred and realized'' by the
producer ``in connection with the production and sale of a foreign like
product, in the ordinary course of trade, for consumption in the
foreign country. * * *'' In such cases where there are no home market
sales of the foreign like product, 19 USC 1677b(e)(2)(B) sets forth
three alternatives for determining a CV profit: (1) The actual amount
of profit incurred or realized by the same producer on home market
sales of the same general
[[Page 56518]]
category of products; (2) the weighted-average of actual amounts
incurred or realized by other investigated companies on home market
sales of the foreign like product; or (3) any other reasonable method,
provided that the amount of profit does not exceed the profit normally
realized by other companies on home market sales of the same general
category of profits. Respondents argue that 19 USC 1677b(e)(2)(B)(i)
contains no limitations on the universe of sales to be used by the
Department in calculating average profit, except that the sales must be
from the same ``general category of products.'' Respondents continue by
stating that the prohibition against below-cost sales contained in 19
USC 1677b(e)(2)(A) is not applicable to the alternative methodologies
contained in 19 USC 1677b(e)(2)(B). While both these sections make
reference to the calculation of profit, the SAA makes clear that these
provisions are separate and distinct and can only be used in narrowly
defined circumstances. Respondents contend that if Congress had
contemplated the exclusion of below-cost sales in such circumstances, a
specific reference would have appeared in the statute or in the SAA.
Department's Position: When calculating profit for purposes of CV,
we have excluded below-cost sales in accordance with section
773(e)(2)(A) only when we have disregarded home market sales because
they failed the cost test. See Statement of Administrative Action
Accompanying the URAA, reprinted in H.R. Doc. No. 316, 103rd Cong., 2nd
Sess. 834, 839-840 (1994). We have not calculated CV profit in
accordance with section 773(e)(2)(B) because that provision applies
only when there are no home market sales of the foreign like product or
when all such sales are at below-cost prices (SAA at 840). In this
review, we have determined that all products produced by the respondent
and sold in the home market during the POR are foreign like products
within the meaning of section 771(16). Moreover, we have determined
that there are sufficient above-cost sales upon which to base CV
profit. Accordingly, section 773(e)(2)(B) is not applicable in this
review.
Comment 5: Petitioners argue that Saha Thai's duty drawback
calculation is incorrect, and that the adjustment to export price
should be denied. Petitioners contend that at verification, the
Department discovered for the first time that the reported drawback for
1995 sales was based upon December 1994 data because Saha Thai had not
received the correct data in time for the response. According to
petitioners, this information was not disclosed to the Department until
verification. Petitioners contend that Saha Thai is eligible for a
drawback only in the amount of duties actually paid and rebated, in
accordance with 19 U.S.C. 1677a(c)(1)(B). Because that amount was
unknown as late as April, 1996, when Saha Thai submitted its final
revisions to its response, the duty drawback adjustment made to 1995
sales should be denied.
In addition, petitioners argue that Saha Thai has overstated the
duty drawback adjustment it is entitled to on all U.S. sales by the
amount of the back guarantees posted to the Thai government. According
to petitioners, Saha Thai is required to post a cash deposit equal to
the value of the import duties plus an additional 20 percent.
Petitioners contend that Saha Thai is not entitled to claim the entire
amount as a drawback of duties. It is argued that the additional 20
percent does not represent a drawback within the meaning of section
772(c)(1)(B) because this 20 percent represents a premium owed to the
government as a penalty if the merchandise is not exported in the
required time period. The statute states that an exporter is eligible
for an adjustment only for import duties paid and rebated, thus Saha
Thai's claim for an adjustment for the entire amount paid plus 20
percent overstates what Saha Thai is eligible to claim.
Respondents agree with petitioners that its reported 1995 duty
drawback figures were necessarily based upon its December 1994 actual
drawback experience. Saha Thai states that it did not have access to
drawback documentation for shipments made in 1995 until well after its
response was due to the Department.
Regarding petitioners' concern that respondent overstated its
drawback figures to include the 20 percent bank guarantee, Saha Thai
states petitioners are in error. Saha Thai asserts that the Department
thoroughly verified petitioners' concerns regarding this issue, and
found Saha Thai's claims to be consistent with information in Saha
Thai's records. At verification, the Department reviewed Saha Thai's
bank guarantees, Customs Department duty refund documentation, and
various import documents which demonstrate that the duty drawback
figures reported to the Department do not include the additional 20
percent premium charged on bank guarantees.
Department's Position: For both 1994 and 1995 (for which
documentation was not available at the time of the questionnaire
responses, but was available to respondent and the Department at
verification), the Department verified that Saha Thai correctly
reported its claimed duty drawback adjustment and that Saha Thai did
not include the additional 20 percent bank premium. For further
information, please see the Department's verification report (Memo to
File from James Rice and Rick Johnson, April 30, 1996).
Comment 6: Petitioners argue that the Department should disregard
Saha Thai's claimed theoretical weight adjustment. Petitioners note
that the Department's verification report indicates that Saha Thai has
the ability to calculate a product-specific weight adjustment, and
argue that respondent should have done so rather that calculate an
average weight adjustment. Petitioners contend that in previous
reviews, Saha Thai has provided the information necessary to make this
calculation. Use of a single ratio is, according to petitioners,
unjustified where the respondent has demonstrated the ability to
compile the necessary information in a similar review.
Saha Thai argues that the Department has accepted a weighted-
average adjustment in previous reviews (1992-93 administrative review).
Additionally, previously calculated product-specific theoretical weight
adjustments varied with factors that occur randomly by size and by time
period. Saha Thai can often use coils of two or three different
thicknesses to produce a given size and grade of pipe. The use of
thicker or thinner coils depends on the coil in stock, and the unit
price affects the weighted-average theoretical weight adjustment in
ways that are unpredictable and not intrinsically related to the
physical characteristics of the merchandise. Moreover, there is no
evidence on the record indicating that Saha Thai takes such variations
into account in pricing its product in any market.
Department's Position: As stated in the Department's verification
report, we reviewed Saha Thai's theoretical weight adjustment
calculation and found it consistent with previous administrative
reviews (see Certain Circular Welded Carbon Steel Pipes and Tubes from
Thailand: Amended Final Results of Antidumping Duty Administrative
Review in Accordance with Decision on Remand 61 FR 29533 (June 11,
1996) and Certain Circular Welded Carbon Steel Pipes and Tubes from
Thailand 56 FR 58355 (November 19, 1991), which were accepted by the
Department. In addition, it was determined by the Department that coils
of varying thicknesses are used by Saha Thai to produce a particular
size and grade pipe
[[Page 56519]]
product. In addition, even though the final product may incorporate
various thicknesses of coil (representing different coil costs), there
was no evidence found a verification that such different coil costs
affected the final price of the subject merchandise.
Comment 7: Petitioners object to Saha Thai's practice of shifting
the interest expense embedded in the cost of coil to SG&A. Petitioners
contend that this practice of deducting interest expense from the coil
cost and adding it to SG&A has the effect of reducing Saha Thai's
reported cost of production. Petitioners contend that these interest
costs are a part of the direct acquisition cost of the coil and are
properly included in raw materials costs.
Saha Thai argues that the Department resolved this issue in the
final results of the 1992-93 administrative review, finding that
interest expenses are fungible and therefore should be treated as a
general expense of the corporation. Consistent with that determination,
respondent holds that it is appropriate to transfer interest expenses
from raw material cost to SG&A. Such expenses should be included either
in SG&A, as provided in Saha Thai's supplemental questionnaire
response, or in interest expense.
Department's Position: As stated in the final results of the 1992-
93 administrative review of this case, we consider the cost of raw
materials to be the price reflected in the supplier's invoice for those
materials. Any financing charges itemized on the supplier's invoice are
properly regarded as interest expenses, not material costs. See, Oil
Country Tubular Goods From Israel; Final Results of Antidumping Duty
Administrative Review, 57 FR 1140 (April 3, 1992). We consider the
expenses Saha Thai incurs to finance its material purchases through its
supplier to be fungible and, therefore, a general expense of operating
the company. See, Circular Welded Carbon Steel Pipes and Tubes from
Thailand; Final Determination of Sales at Less Than Fair Value, 51 FR
3384 (January 27, 1986), Circular Welded Carbon Steel Pipes and Tubes
from Thailand: Final Results of Antidumping Duty Administrative Review,
61 FR 1328 (January 19, 1996). Therefore we have continued to classify
Saha Thai's interest expenses as SG&A expenses for these final results
of review.
Comment 8: Petitioner states that the Department incorrectly
calculated total cost of production (TOTCOP) and net sales price
(NPRICOP) for its below cost sales test. 19 USC 1677b(b)(3) requires
that cost of production include (1) to the cost of materials,
fabrication and processing, (2) an amount for selling, administrative
and general expenses, and (3) the cost of containers (packing).
Petitioners argue that the Department failed to include selling
expenses in its calculation of TOTCOP. Petitioners contend that the
Department improperly deducted selling expenses from NPRICOP rather
than properly adding them to TOTCOP in accordance with the statute.
Respondents note that petitioners' arguments are not reflective of
the Department's standard policy regarding the calculation of TOTCOP
and NPRICOP. Saha Thai asserts that if selling expenses are included in
TOTCOP, then domestic transportation and selling expenses should not be
deducted from the NPRICOP in order to ensure that there is an apples-
to-apples comparison.
Department's Position: The Department agrees that our comparison of
net sales price and cost of production was incorrect. In order to
ensure an ``apples to apples'' comparison between the net home market
selling price and the total cost of production of the subject
merchandise, for the final results of this administrative review, in
accordance with section 773(b)(3)(B) we included selling expenses in
the calculation of total cost of production and did not deduct domestic
transportation expenses from NPRICOP.
Comment 9: Saha Thai argues that the Department departed from
established practice when it immediately resorted to constructed value
rather than moving on to the next most similar home market sale where
an appropriate (identical or first most similar) match could not be
found. Respondents cite Certain Forged Steel Crankshafts from the
United Kingdom (56 FR 5975, 5977, February 14, 1991) (Crankshafts from
the United Kingdom) in which the Department stated ``In the first
review, when there were no contemporaneous sales of the most similar
home market model to compare with sales of a U.S. model, we examined
the other similar models for contemporaneity. As a result of this
examination, we found that none of those other sales was
contemporaneous. As a result, we had to rely on CV as the basis for
FMV. However, the facts are different in this review. In this review
[the second administrative review of Crankshafts from the United
Kingdom], when there were no contemporaneous sales of the most similar
model match, there were often contemporaneous sales of the next most
similar models.'' Saha Thai adds that this policy was followed in
previous reviews in this proceeding, and that the Department should use
the suggested model matches as submitted by Saha Thai.
Petitioners argue that the Department correctly resorted to CV, and
is acting in accordance with longstanding Departmental policy in
accordance with precedent of the Court of International Trade.
Petitioners cite 19 U.S.C. 1677(16), which provides for only one
foreign like product for each U.S. product sold. Petitioners contend
that this provision sets up a hierarchy of three choices for foreign
like product in order of preference and dictates that the foreign like
product is the first category for which a determination may be made,
indicating that once a foreign like product is established, that choice
cannot be altered by the operation of the 90/60 window. The foreign
like product cannot be different during different 90/60 day periods of
the same review period.
Petitioners contend that 19 U.S.C. 1677(a)(4) directs the
Department to apply constructed value whenever a duly chosen foreign
like product cannot be used to determine normal value under section
1677(a)(1)(B). Citing Color Television Receivers from the Republic of
Korea (58 FR 52262, 52263 (October 7, 1993)), petitioners assert that
both the Department and the CIT have adhered strictly to the plain
language of the statute by refusing to read into the hierarchy such
factors as whether a sale is in the ordinary course of trade (see,
Cyanuric Acid and its Chlorinated Derivatives from Japan Used in the
Swimming Pool Trade, 49 FR 7424 (February 29, 1984), which was
sustained in Monsanto Co. v. United States, 698 F. Supp. 275 (CIT
1988), at the same level of trade (citing Timken Co. v. United States,
673 F. Supp. 495 (CIT 1987) and NTN Bearing Co. v. United States, 747
F. Supp. 726, 736 (CIT 1990)), or whether the price is below the cost
of production (citing Antifriction Bearings from France et al., 57 FR
28360, 28373 (June 24, 1992)). The same considerations of statutory
interpretation also prevent the 90/60 contemporaneity test from being
insinuated into section 1677(16).
Petitioners hold that attaching the 90/60 contemporaneity test to
section 1677(16) would not only be inconsistent with Departmental
practice and the CIT, but would also reach beyond the scope of the
Department's statutory authority. Petitioners state that the Department
is bound by the plain language of the statute--a conclusion that it
must base normal value on CV pursuant to 19 U.S.C. 1677b.
Department's Position: In this review, we used the following model
match methodology: in the model match
[[Page 56520]]
program, we compared U.S. sales to contemporaneous home market sales of
the comparison model that was physically ``most similar'' and which
passed the 20 percent difmer test (which often resulted in an identical
match). In the margin calculation program, we used the results of the
model match program to merge a U.S. sale with the ``most similar'' home
market sale within the 90-60 window. If no match was found, either
because the model match program found no contemporaneous sale of an
identical or similar product or because the appropriate home market
sales failed the COP test, the U.S. sale was compared to CV.
We disagree with the respondents' contention that this methodology
is a departure from ``established practice.'' Our model match
methodology is consistent with our practice of determining the foreign
like product based upon the similarity of the merchandise and resorting
to CV only when the sale of the identical or most similar merchandise
fails our COP test. See, e.g., Antifriction bearings (Other than
Tapered Roller Bearings and Parts Thereof from France et al., 58 FR
39729, 39764-66 (July 26, 1993). We also disagree with the respondents'
contention that we must use the ``next most similar'' match before
resorting to CV. Section 771(16) of the Act provides the Department
with discretion to determine which merchandise (foreign like product)
may be reasonably compared to subject merchandise and provides a
hierarchy of preferences for determining which merchandise sold in the
foreign market is most similar to merchandise sold in the United
States. The model match methodology we used in this review identified
the ``most similar'' foreign like product taking into account the
contemporaneity of the match. After identifying the ``most similar''
foreign like product, we apply the cost test under Sec. 773(b) because
the COP test should not be part of the basis for determining the ``most
similar'' foreign like product. Section 771(16) does not direct us to
the ``next most similar'' foreign like product if the first match is
sold below cost. Therefore, we use CV when the ``most similar'' foreign
like product is sold below cost. This methodology, which the Court of
International Trade affirmed in Federal Mogul Corp. v. United States,
918 F. Supp. 386, 396-97 (CIT 1996), is consistent with the requirement
in section 771(16) that the determination of the foreign like product
be based solely upon the similarity of the merchandise and not whether
the merchandise is sold below cost. The methodology used in Crankshafts
from the United Kingdom was a deviation from our standard practice that
was necessitated by the unique model matching issues and home market
price fluctuations which occurred in that review. The facts on the
record in this review do not warrant a similar deviation from our
standard practice.
Although petitioners agree with the Department's use of CV, we
disagree with petitioners' contention that section 771(16) provides for
only one foreign like product for each U.S. product sold throughout the
POR. Under the URAA, the term ``foreign like product'' was substituted
for ``such or similar'' to conform with terminology used in the
Antidumping Agreement. By this substitution Congress did not intend to
affect the interpretation or practice followed by the Department in
administering the antidumping duty statute. SAA at 820. Accordingly,
depending on the nature of the product subject to examination, there
may be various models that qualify as the ``foreign like product''
within the meaning of section 771(16) just as there may be various
models of ``similar'' merchandise under the pre-URAA statute. Nor do we
agree, as petitioners' suggest, that the 90/60 day test is irrelevant
to selecting the foreign like product under section 771(16). The
Department must identify an appropriate universe of transactions from
which it can select the best model match. Because section 773(a)(1)
requires that price comparisons be based on reasonably contemporaneous
sales, it is the Department's practice to select matches from the
universe of contemporaneous sales. The cases cited by the petitioners
in support of its proposition do not demonstrate that this application
of our contemporaneity test is unreasonable because none of those cases
involved the question of an appropriate comparison based on the date of
sale.
Comment 10: Saha Thai contends that the Department improperly
deducted packing costs from the net U.S. price and from net home market
price, but also added U.S. packing costs to normal value, thus
comparing an unpacked U.S. price to a packed price in the home market.
Petitioners agree with Saha Thai that U.S. packing should not be
deducted from U.S. price.
Department's Position: The Department agrees that in accordance
with section 772(c)(1), U.S. packing should not be deducted from U.S.
price. U.S. packing should instead be added to normal value in
accordance with section 773(a)(6)(A).
Comment 11: Saha Thai alleges that the Department's margin program
erroneously compares a total cost of production (TOTCOM) inclusive of
packing costs to a net price (NPRICOP) from which packing costs have
been deducted. The Department should have compared RCOP (total COP
exclusive of packing) to NPRICOP.
Petitioners disagree with Saha Thai, and argue that section
1677(b)(3)(C) specifically requires the cost of packing be included in
the cost of production for comparison to the home market price.
Department's Position: In accordance with section 773(b)(3)(C), we
have included packing costs in our calculation of the cost of
production. Consistent with our practice described in Comment 8, we
have included these packing expenses costs in NPRICOP to obtain an
``apples-to-apples'' comparison between TOTCOP and NPRICOP.
Comment 12: Saha Thai argues that the Department erred in
calculating export price by deducting U.S. direct selling expenses.
Respondent contends that U.S. direct selling expenses should have been
added to the normal value as a circumstance of sale adjustment, citing
Koyo Seiko Co., v. United States, 796 F. Supp. 1526, 1531 (CIT 1992).
Petitioners disagree with Saha Thai's assertion that U.S. direct
selling expenses should be added to normal value as a circumstance of
sale adjustment. Petitioners contend that it has been long-standing
Departmental policy to deduct direct selling expenses from U.S. price
(export price) rather than add it to FMV (normal value), as proposed by
Saha Thai. According to petitioners, the court reviewed the matter de
novo after finding out that, because it was the Department's policy, it
would have been futile for Koyo Seiko to have raised the issue before
the agency. Moreover, petitioners hold that the court's position on
direct selling expenses was subsequently vacated by the CIT after
remand, citing Koyo Seiko Co. v. United States, 806 F. Supp. 1008 (CIT
1992).
Department's Position: As stated in Stainless Steel Cookware from
the Republic of Korea; Final Results of Administrative Review, 59 FR
10788 (March 8, 1994), it is the Department's policy, when purchase
price (EP) sales are examined, to add U.S. direct selling expenses to
FMV (NV) as a circumstance-of-sale adjustment, pursuant to section 773
of the Act. The URAA did not change this policy. The Koyo Seiko
decisions are irrelevant to this determination because these cases
involved exporter's sales price (CEP) sales which are not subject to
[[Page 56521]]
examination in this review. Therefore, we have corrected this error.
Comment 13: Saha Thai contends that the Department erred in
deducting inventory carrying expenses from net price for purposes of
comparing selling price with cost of production. Saha Thai argues that
this value is included in its reported general and administrative
expenses and is included in its total cost of production. Therefore,
the Department should not have deducted inventory carrying expenses
from the net price before comparing that net price to Saha Thai's cost
of production. Saha Thai holds that this deduction is contrary to the
Department's policy (see Import Administration Policy Bulletin, No.
94.6, March 25, 1994). Petitioners did not comment on this issue.
Department's Position: The Department agrees with respondent
because the deduction of inventory carrying expenses from net price
does not result in an apples-to-apples comparison. The Department does
not make adjustments for imputed costs in comparing prices to COP. To
deduct inventory carrying expenses from the net price without a similar
adjustment to total cost of production would distort the Department's
cost test.
Comment 14: Saha Thai argues that the Department double counted
respondents' interest expense for both total cost of production and
constructed value. The Department created the variable INTEX, which
represents Saha Thai's net interest expense as a percentage of its
total cost of goods sold. Saha Thai holds that its actual interest
expense is already reported in its general and administrative expenses.
This addition of an imputed interest factor, according to respondent,
is in violation of section 773(e)(2)(A) of the Act, which requires that
the Department base selling, general, and administrative expenses on
``actual amounts incurred and realized'' by the respondent. In
computing CV these costs may not be based on imputed amounts or an
arbitrary minimum.
Petitioners contend that it is appropriate for the Department to
use the higher INTEX value as a substitute for Saha Thai's reported
interest expense as an adverse inference because Saha Thai failed to
report the correct sales for the POR.
Department's Position: The Department agrees with respondents,
because the inclusion of the imputed interest expense factor INTEX has
the effect of double counting Saha Thai's reported, and verified,
interest expense. We have deleted the variable INTEX from the margin
calculation program.
Comment 15: Saha Thai argues that the Department erred in computing
the import-specific assessment rate by multiplying the margin by U.S.
quantity twice. Petitioners did not comment on this issue.
Department's Position: We agree with respondent, and this error as
been corrected.
Final Results of Review
As a result of our review, we have determined that the following
margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Saha Thai/SAF........................... 3/1/94-2/28/95 5.95
Pacific Pipe Co......................... 3/1/94-2/28/95 (\1\)
------------------------------------------------------------------------
\1\ No sales during the review period.
The Department shall determine, and the Customs Service shall
access, antidumping duties on all appropriate entries. Individual
differences between United States price and normal value may vary from
the percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of certain welded carbon steel pipes and tubes from Thailand
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided for by section 751(a)(1) of the Act: (1)
the cash deposit rates for the reviewed companies will be the rates for
those firms as stated above; (2) for previously investigated or
reviewed companies not listed above, the cash deposit rate will
continue to be the company-specific rate published for the most recent
period; (3) if the exporter is not a firm covered in this review, a
prior review, or the original investigation, but the manufacturer is,
the cash deposit rate will be the rate established for the most recent
period for the manufacturer of the merchandise; and (4) the cash
deposit rate for all other manufacturers or exporters will continue to
be 15.67 percent, all other rates established in the LTFV
investigation. See Final Determination and Antidumping Duty Order:
Certain Welded Carbon Steel Pipes and Tubes from Thailand, (51 FR 8341,
March 11, 1986).
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties incurred and the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely notification of return/destruction of APO materials
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and the terms of an APO is a
sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: October 23, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-28116 Filed 10-31-96; 8:45 am]
BILLING CODE 3510-DS-M
